Auditor-General to probe Saudi sheep scandal

Inquiry prompted by requests from two MPs, the NZ Taxpayers' Union and more than 10,000 New Zealanders.

See also: Majority disagree with Key over McCully and Taxpayers' Union laying complaint with SFO over $4.5m Saudi sheep deal invoice

Auditor-General Lyn Provost will conduct an inquiry into the expenditure of public money on the Saudi Arabia Food Security Partnership – or what has popularly been dubbed “the Saudi sheep scandal.”

A statement from her office says Mrs Provost’s probe has been prompted by several requests – including from two members of Parliament and the NZ Taxpayers’ Union – not to mention a petition signed by more than 10,000 New Zealanders – to inquire into aspects of the deal,

The terms of reference of the inquiry, which will be conducted in accordance with the Public Audit Act 2001, include an examination of:

  • the amount of public money budgeted and spent on the partnership, how it has been used, and the outcomes achieved with it;
  • whether the expenditure on services was within the appropriations of Vote Foreign Affairs and Trade, as authorised by Parliament;
  • the procurement and contract management practices used by the Ministry and NZ Trade and Enterprise to purchase services relating to the Partnership;
  • whether the services received were in keeping with the business case and contract specifications; and
  • any other related matter the Auditor-General considers desirable to inquire into and report on.

Mrs Provost has also noted that in 2013 her office commented on the partnership’s indicative business case and the related appropriation at the request of the Ministry of Foreign Affairs and Trade.

Although the letters setting out those comments – which included the observation that the case was "weak" and expressed doubts about its legality – have already been released publicly, Mrs Provost says that “there have been significant developments in the execution of that business case since 2013, and the inquiry will focus mainly on that period.”

In keeping with the usual practice of the Auditor-General’s Office, there will be no further public comment on the inquiry until it is complete.

In the meantime, the architect of the deal – Foreign Minister Murray McCully – has officially welcomed the Auditor-General’s announcement of an inquiry via a media statement.

“We have said from the outset that the Auditor-General is entitled to scrutinise any spending of public money, whenever she chooses, and we welcome her decision to carry out an inquiry into the Saudi Food Security Partnership," Mr McCully’s statement says.

"The government is comfortable with the process that was followed in relation to the agrihub, and the wider Food Security Partnership, and relevant departments, including MFAT, will provide all necessary support to the inquiry.”

If nothing else, the inquiry will be a relief to Mr McCully in that it gives him a valid excuse not to respond to questions about the deal for the foreseeable future.

“It would be inappropriate for me to comment further while the Auditor-General's inquiry is ongoing," Mr McCully’s statement says.

Also welcoming the inquiry is NBR columnist Matthew Hooton, who first exposed the existence of the deal in May.

In conjunction with reporting from NBR journalist Jamie Ball (now in Europe), Mr Hooton has been a staunch critic of every aspect of “the partnership” since then, most recently calling for Mr McCully to be sacked for his part in it.

Speaking to NBR after the Auditor-General’s announcement, Mr Hooton notes that “the terms of reference include the usual catch-all clause, so the inquiry could develop in any which way the Auditor-General thinks fit.”

Mr Hooton says he “wouldn’t be surprised” if one of the areas Mrs Provost decides to take a look at is Mr McCully’s “appointment of a private emissary between him and Saudis, and whether it’s appropriate for a minister to appoint – apparently without any tender process – an old friend to conduct international relations in a region with which they are unfamiliar.”

The Green Party, meanwhile, has called for Mr McCully to be stood down from cabinet pending the inquiry’s findings.

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